TDS Receivable

TDS Receivable is the asset ledger under Indirect Tax Assets that records income tax your customers withheld when they paid your invoices. When a company or government office pays you, it deducts TDS at the prescribed rate on the taxable value, pays the rest and deposits the tax under your PAN. That deposit is a prepayment of your own income tax, and the IRD sets it off against the tax due on your annual return. You record it on the Payment Entry as a deduction so the invoice clears in full while the withheld part lands here. Keep the customer's withholding certificate or the IRD portal record for each row; without it the credit may be refused at assessment.

TDS Receivable = Taxable value of the invoice x Customer's withholding rate; Bank receipt = Grand total - TDS Receivable.

1. 01Go to Payments > Payment Entry > New, type Receive, and pick the customer.
2. 02Allocate the invoice ACC-SINV-2026-00004 for its full Rs 36,160 in the References table.
3. 03Set Paid Amount to Rs 35,680, the amount that actually reached the bank.
4. 04In the Deductions or Loss table add a row: account TDS Receivable, amount Rs 480.
5. 05Submit. The entry above posts, the invoice is fully paid and Rs 480 waits in TDS Receivable.
6. 06At year end, claim the TDS Receivable total on the income tax return against tax due.

Record it on the Payment Entry as a deduction when a customer pays short by the TDS amount.

A corporate client pays Rs 35,680 on the Rs 36,160 bill; the Rs 480 withheld (1.5% of Rs 32,000) lands in TDS Receivable.